Credit Insurer Euler Hermes is understood to be reviewing the creditworthiness of hundreds of retailers as it adopts an even more conservative stance on the sector.

Last week shares in Topps Tiles fell sharply after it emerged that Euler had withdrawn cover from some of its suppliers. However, the move is thought to be part of a wider review.

The removal of credit insurance can be a serious blow to a company, as it is often interpreted as a sign of distress. Insiders, however, say Euler wants to reduce its exposure as sales in the retail sector decline. Some cuts could be as deep as 50%.

"There is a belief clients do not need as much cover," said a source familiar with the situation. "The decision doesn't reflect negatively on a company per se: it is a deliberate strategy to match suppliers' needs to a lower level of demand."

In a recent survey of retailers by consultancy Kreab Gavin Anderson, 62% reported that their suppliers had experienced problems with credit insurance. The retail chiefs consulted spoke for 40% of high street sales, with one describing the market as "effectively closed".

Insurers are staring at an increasingly bleak landscape as retail blackspots emerge around the country. Last week another 3,500 shopworkers were made redundant as administrators working for Barratts owner Stylo, the music chain Zavvi, and JJB Sports' Original Shoe Company and Qube chains closed almost 300 stores.

Analysts at Experian estimate that the number of empty stores will have hit one in 10 by the end of next week.